RAM Ratings affirms CIMB Thai’s AA2 financial institution rating

Published on 17 Aug 2023.

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RAM Ratings has affirmed CIMB Thai Bank Public Company Limited’s (CIMB Thai or the Bank) AA2/Stable/P1 financial institution ratings as well as the AA3/Stable rating of its RM2 bil Tier-2 Subordinated Debt Programme (2014/2044). 

The ratings reflect our expectation of continued support from CIMB Thai’s immediate parent, CIMB Bank Berhad (rated AAA/Stable/P1), when needed given the Bank’s strategic role in CIMB Group Holdings Berhad’s (the Group, rated AA1/Stable/P1) ASEAN-focused strategy.

Under CIMB Group’s Forward23+ strategy, CIMB Thai accelerated the rundown of its commercial banking book, redirecting its focus towards driving growth in consumer banking, wealth management as well as treasury and markets. Commercial loans – the main source of impairments in the past – now account for only 4% of its loan portfolio compared to the high teens five years ago. Sizeable writeoffs of bad debts and disposals over the years also led to a gradual reduction in the Bank’s gross impaired loan (GIL) ratio, which stood at 3.2% as at end-March 2023 (end-December 2021: 3.7%). 

CIMB Thai’s common equity tier-1 capital ratio remained robust at 16.5% on the same date (end-December 2021: 16.2%). This, together with a stronger GIL coverage ratio of 121.6% (end-December 2021: 112.5%), provides sufficient cushioning against any credit deterioration arising from protracted and uneven economic recovery in Thailand.

The Bank’s profitability has historically been weak due to elevated credit charge-offs, a weak deposit franchise and high operating cost structure in view of its subscale operations in the Thai banking sector. The five-year (2018-2022) average return on risk weighted assets stood at a mere 0.86%. Some improvement observed in recent years owing to a moderation of impairment charges and cost to income ratio was partly offset by continuous contraction in the Bank’s net interest margin (NIM). Growth in lower-yielding mortgage refinancing loans relative to commercial banking loans poses a drag on NIMs. In FY Dec 2022, the Bank’s pre-tax profit rose 28% to THB3.7 bil, primarily because of lower provisioning expenses.


Analytical contacts
Lee Jo Yee
(603) 3385 2583

Loh Kit Yoong
(603) 3385 2493


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2023 by RAM Rating Services Berhad

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Ratings on CIMB Thai Bank Public Company Limited